Operation Management

Question 1

To improve labor productivity you must:

Answer 1

• Increase output with the same number of workers

- Keeping output at the same level but with fewer workers

Question 2

How to achieve those (labor productivity)

Answer 2

• Improving the skill level
• Improving motivation
• Introducing more automation and better technology
• Improving the quality of management decisions

Question 3

What are the costs included?

Answer 3

• Warehousing costs: the business will need to rent or purchase a warehouse to store the inventories
• Handling costs: Inventories need to be moved out of the warehouse
• Shrinkage costs: Damaged, lost or stolen inventories will need to be replaced
• Insurance costs: These will cover the cost of losses from shrinkage

Question 4

What are the inventories included?

Answer 4

• Raw materials and components needed for production
• Work-in-progress, which are partly finished goods that have not yet completed the production process
• Finished goods ready to be sold or sent out to customers

Question 5

Define lean production

Answer 5

The production of goods and services with the minimum waste of resources

Question 6

Define just in time inventory

Answer 6

When businesses don’t hold any inventories and raw materials and components arrive from suppliers just when they are needed in the production processes

Question 7

How technology has changed production methods?

Answer 7

• Increase production efficiency by producing less waste - less mistakes than humans
• More cost effective
• Decreases the cost of hiring labor

Question 8

Why use break even chart?

Answer 8

• Calculate how many units it needs to sell before it starts to make a profit
• Calculate the effect on profit of increasing or decreasing the price of a product
• Calculate the effect on profits of an increase or decrease in business costs

Question 9

Define quality

Answer 9

Ensuring a good or service that meets the needs and requirements of its customer

Question 10

Factors relevant to the location decision of manufacturing businesses and service businesses ( quantitative)

Answer 10

• Cost of site
• Availability and cost of labor
• Transport costs
• Market potential

Question 11

Factors relevant to the location decision of manufacturing businesses and service businesses (qualitative)

Answer 11

• Size of site
• Legal controls
• Infrastructure
• Ethical

Question 12

Factors that a business could consider when deciding which country to locate operations in

Answer 12

• Barriers to trade
• Economy of the country
• Legal controls
• Costs
• Cultural differences

Question 13

The role of legal controls on location decisions

Answer 13

Governments may restrict businesses from operating near local housing or areas that could be harmed by noise pollution, light pollution, air pollution etc - business must decide whether or not the legal controls enforced by the government of the country would be a problem for the business